Concept:Factory workers are a variable input, because their wages change with production needs.
Explanation:Retrenchment means the firm reduces the number of its factory workers.
Since workers are hired on a variable basis, the wages paid to them form part of the firm’s variable cost.
When some workers are retrenched, the total wage bill falls, so variable costs directly decline.
Fixed costs, such as rent or machinery, remain unchanged because they do not depend on the number of workers.
Average fixed cost may rise if output falls, and marginal cost could change, but the most immediate and certain effect is that variable cost declines.
Answer:B. variable cost will decline